SMTC Reports First Quarter Results



    TORONTO, May 14 /CNW/ - SMTC Corporation (Nasdaq:   SMTX, TSE: SMX), a
global electronics manufacturing services provider, today reported 2009 first
quarter results. Financial performance in the quarter was heavily impacted by
the global recession. Revenue in the quarter at $48.5 million was $12.6
million lower than the preceding quarter and $6.6 million below the first
quarter of 2008. The net loss for the quarter of $2.5 million compares with a
net loss of $0.1 million in the fourth quarter of 2008 and net income of $0.4
million for the comparable period last year. To significantly lower ongoing
costs and reduce manufacturing capacity in higher cost regions, the Company
undertook several restructuring initiatives including staff reductions, the
announced closure of the Enclosures Systems Division Boston facility and other
cost containment measures. This resulted in a $1.0 million restructuring
charge in the quarter. Excluding the loss arising from overcapacity in the
Enclosures Systems division and the restructuring charge, the Company would
have recorded a modest profit in the quarter.
    "Virtually all our customers were affected by the global recession as end
market demand and inventory reductions impacted their first quarter production
requirements. Faced with overcapacity and in anticipation of further
deterioration in customer demand for the second quarter, we undertook action
to significantly reduce our cost structure, eliminate excess capacity and
shift production to lower cost geographies. We also significantly reduced
inventory levels in the quarter," stated John Caldwell, President and Chief
Executive Officer.
    "While we are encouraged by newer customer plans to ramp production in
the second half of the year, given the uncertainty in the current recessionary
environment, we intend to prudently manage our costs while pursuing full
capability to serve our customers, reduce working capital and further lower
our debt through the balance of the year," stated Mr. Caldwell.

    About SMTC Corporation:

    SMTC Corporation, founded in 1985, is a mid-size provider of end-to-end
electronics manufacturing services (EMS) including PCBA production, systems
integration and comprehensive testing services, enclosure fabrication, as well
as product design, sustaining engineering and supply chain management
services. SMTC facilities span a broad footprint in the United States, Canada,
Mexico, and China, with more than 1000 full time employees. SMTC services
extend over the entire electronic product life cycle from the development and
introduction of new products through to the growth, maturity and end-of-life
phases. SMTC offers fully integrated contract manufacturing services with a
distinctive approach to global original equipment manufacturers (OEMs) and
emerging technology companies primarily within industrial, computing and
communication market segments.
    SMTC is a public company incorporated in Delaware with its shares traded
on the Nasdaq National Market System under the symbol SMTX and on the Toronto
Stock Exchange under the symbol SMX. For further information on SMTC
Corporation, please visit our website at www.smtc.com (http://www.smtc.com/)

    Note for Investors:

    The statements contained in this release that are not purely historical
are forward-looking statements which involve risk and uncertainties that could
cause actual results to differ materially from those expressed in the
forward-looking statements. These statements may be identified by their use of
forward-looking terminology such as "believes", "expect", "may", "should",
"would", "will", "intends", "plans", "estimates", "anticipates" and similar
words, and include, but are not limited to, statements regarding the
expectations, intentions or strategies of SMTC Corporation. For these
statements, we claim the protection of the safe harbor for forward-looking
statements provisions contained in the Private Securities Litigation Reform
Act of 1995. Risks and uncertainties that may cause future results to differ
from forward-looking statements include the challenges of managing quickly
expanding operations and integrating acquired companies, fluctuations in
demand for customers' products and changes in customers' product sources,
competition in the EMS industry, component shortages, and others discussed in
the Company's most recent filings with securities regulators in the United
States and Canada. The forward-looking statements contained in this release
are made as of the date hereof and the Company assumes no obligation to update
the forward-looking statements, or to update the reasons why actual results
could differ materially from those projected in the forward-looking
statements.


    
    Consolidated Statements of Operations and Comprehensive Income
    (Unaudited)

                                                       Three months ended
    -------------------------------------------------------------------------

    (Expressed in thousands of U.S. dollars,         April 5,      March 30,
     except number of shares and per share amounts)    2009          2008
    -------------------------------------------------------------------------
    Revenue                                        $    48,462   $    55,140
    Cost of sales                                       45,628        50,739
    -------------------------------------------------------------------------
    Gross profit                                         2,834         4,401
    Selling, general and administrative expenses         3,857         3,189
    Restructuring charges                                  974          (225)
    Operating earnings (loss)                           (1,997)        1,437
    Interest expense                                       327           913
    -------------------------------------------------------------------------
    Earnings (loss) before income taxes                 (2,324)          524
    Income tax expense                                     164           103
    -------------------------------------------------------------------------
    Net earnings (loss), also being comprehensive
     income (loss)                                 $    (2,488)  $       421
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Basic (loss) earnings per share                $     (0.17)  $      0.03
    Diluted (loss) earnings per share              $     (0.17)  $      0.03
    Weighted average number of shares outstanding
    Basic                                           14,646,333    14,646,333
    Diluted                                         14,646,333    14,662,931



    Consolidated Balance Sheets as of
    (Unaudited)

    -------------------------------------------------------------------------
                                                     April 5,     January 4,
    (Expressed in thousands of U.S. dollars)           2009          2009
    -------------------------------------------------------------------------
    Assets

    Current assets:
    Cash                                           $       445   $     2,623
    Accounts receivable - net                           27,886        28,648
    Inventories                                         30,283        36,823
    Prepaid expenses                                     1,568         1,203
    -------------------------------------------------------------------------
                                                        60,182        69,297
    Property, plant and equipment                       16,180        16,743
    Deferred financing fees                                873           786
    Deferred income taxes                                  344           479
    -------------------------------------------------------------------------
                                                   $    77,579   $    87,305
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Liabilities and Shareholders' Equity

    Current liabilities:
    Accounts payable                               $    32,116   $    37,209
    Accrued liabilities                                  5,382         6,909
    Income taxes payable                                   487           504
    Current portion of long-term debt                    3,712         2,738
    Current portion of capital lease obligations         1,048         1,101
    -------------------------------------------------------------------------
                                                        42,745        48,461

    Long-term debt                                      14,663        15,943
    Capital lease obligations                            1,256         1,587

    Shareholders' equity:
    Capital stock                                        7,419         7,456
    Warrants                                                 -        10,372
    Additional paid-in capital                         252,536       249,655
    Deficit                                           (241,040)     (246,169)
    -------------------------------------------------------------------------
                                                        18,915        21,314
    -------------------------------------------------------------------------
                                                   $    77,579   $    87,305
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Consolidated Statements of Cash Flows
    (Unaudited)

                                                       Three months ended
    -------------------------------------------------------------------------
    (Expressed in thousands of U.S. dollars)
    -------------------------------------------------------------------------

                                                     April 5,      March 30,
    Cash provided by (used in):                        2009          2008
    -------------------------------------------------------------------------
    Operations:
    Net earnings (loss)                            $    (2,488)  $       421
    Items not involving cash:
    Depreciation                                           717         1,124
    Deferred income taxes                                  135            (9)
    Non-cash interest                                       64           104
    Stock-based compensation                                10           208
    -------------------------------------------------------------------------
                                                        (1,562)        1,848
    Change in non-cash operating working capital:
      Accounts receivable                                  762         4,456
      Inventories                                        6,540        (8,016)
      Prepaid expenses                                    (365)         (175)
      Income taxes recoverable                             (17)          (14)
      Accounts payable                                  (5,093)        3,198
      Accrued liabilities                               (1,439)          433
    -------------------------------------------------------------------------
                                                        (1,174)        1,730
    Financing:
    Repayment of long-term debt - net                     (306)       (1,020)
    Principal payment of capital lease obligations        (384)         (176)
    Deferred financing costs                              (151)            -
    -------------------------------------------------------------------------
                                                          (841)       (1,196)
    Investing:
    Purchase of property, plant and equipment             (163)         (243)
    -------------------------------------------------------------------------
    Increase in cash and cash equivalents               (2,178)          291
    Cash and cash equivalents, beginning of period           -           182
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of the period   $    (2,178)  $       473
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    Supplementary Information:

    Reconciliation of EBITDA

    -------------------------------------------------------------------------

                                                       Three months ended
                                                  ---------------------------

                                                     April 5,      March 30,
                                                       2009          2008
    -------------------------------------------------------------------------
    Operating earnings (loss)                      $    (1,997)  $     1,437
    Add:
      Depreciation                                         717         1,124
      Restructuring charges                                974          (225)
    -------------------------------------------------------------------------
    EBITDA                                                (306)        2,336
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    




For further information:

For further information: Jane Todd, Senior Vice President, Finance and
Chief Financial Officer, (905) 413-1300, Email: jane.todd@smtc.com

Organization Profile

SMTC CORPORATION

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